The Morning Paper

07/11/12 -- The overnight electronic market is modestly higher  following news that Obama has been re-elected. The general vibe seems to be that this means the Fed's free and easy monetary policy is likely to continue a while yet.

The next big news of the week comes Friday with the USDA's November WASDE report, which frequently provides us with fireworks. Will they be bullish or bearish ones this year? The smart money seems to be on the former at the moment.

Before that we have the weekly export sales (and shipments) data tomorrow. Monday's export inspections report indicates that there has been little let up in the very strong pace of US soybean exports, so we can expect that trend to continue for the rest of the year by the looks of things.

US corn sales and shipments have been poor, as too has been domestic demand from the ethanol sector. Yesterday's news that New Energy Corp. in South Bend, Indiana was to cease ethanol production until margin improve followed hot on the heels of a similar announcement last week from Valero concerning plants in Albion, Nebraska and Linden, Indiana.

US wheat sales have been so, so thus far, although many are expecting a significant improvement by the time we are into 2013.

Worth looking out for on Friday will be the USDA's assessment of the Chinese wheat crop after their attaché in Beijing estimatedproduction this year at only 108.0 MMT versus 117.9 MMT in 2011/12 and 10 MMT less than the USDA themselves said last month.

China's wheat import requirements were only placed at 1.5 MMT last month, yet they've shipped more than 1 MMT in during the first three months of 2012/13 already.

The Chinese think tank CNGOIC forecast rapeseed production there down 9% this year to 12.2 MMT.

Kazakhstan's harvest is over, producing a grain crop of 14.72 MMT in bunker weight versus 29.7 MMT in 2011. That suggests a clean weight crop of around 12.5 MMT, less than half of last year's output of 27 MMT. Agritel suggest that even this is too high and that 11.0-11.5 MMT may be closer to the truth. Yields averaged less than a tonne/hectare, down 45% on 2011, say the Ministry. Exports are seen at 7 MMT in 2012/13 as opposed to 12 MMT in 2011/12, they estimate. Again, Agritel think that even this may be optimistic.

Oil World are now talking down soybean production in both Argentina (too wet) and Brazil (too dry in northern & central areas). Brazil's wheat crop, being harvested now, which is mainly grown in the southern states of Parana and Rio Grande do Sul is being downgraded due to too much rain I hear. CONAB are out tomorrow with their latest Brazilian production forecasts.

Respected analyst Michael Cordonnier has cut his Argentine corn production estimate to 22.5 MMT, well below the USDA's 28 MMT forecast last month, will they at least partially concur on Friday?

UK wheat imports will reach 2 MMT this year, according to ODA I read this morning, which is a bit higher than the HGCA's recent 1.7 MMT estimate although in line with other trade estimates.

Most active May 13 London wheat has already taken out yesterday's all-time high and currently trades GBP0.75/tonne higher at GBP225.50/tonne. New crop Nov 13 wheat is also GBP0.75/tonne higher in early trade, matching yesterday's contract high of GBP193.00/tonne.